2014 (7) TMI 1351 - HC - Income Tax

Validity of reopening of assessment u/s 147 - Non disposal of objection to the reasons filed by an assessee by a speaking order - HELD THAT - A law laid down by the Supreme Court in the case GKN Driveshrafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT has not been followed by the Assessing Officer. The aforesaid decision requires the Assessing Officer not only to furnish reasons for the proposed reopening of the assessment but also has to dispose of the objection to the reasons filed by an assessee by a speaking order. We set aside the Assessment order passed in respect of Assessment year 2008-09. We note that the petitioner had, by diverse communications filed their objections to the grounds in support of the impugned notices furnished by the Assessing Officer. We permit the petitioner to file a consolidated objections to both the impugned notices within a period of two weeks from today before the Assessing Officer. The Assessing Officer, thereafter, will dispose of the objections filed by the petitioner in respect of both the impugned notices. Assessing Officer would not commence re-assessment proceedings for a period of four weeks from the date of communication of the order disposing of the objections filed by the petitioner.

Summary

Issues: Challenge to reopening of assessment for Assessment Year 2008-09 under Section 148 of the Income Tax Act, 1961; Non-compliance with Supreme Court decision in "GKN Driveshrafts (India) Ltd. Vs. ITO; (259 ITR 19)" by the Assessing Officer.

Analysis:
1. The petition challenges two notices dated 8.3.2013 and 25.3.2013 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2008-09. The petitioner was provided reasons for the notices on 6.12.2013 and filed objections against the reopening. However, the Assessing Officer proceeded to pass an assessment order dated 3.3.2014 without addressing the objections, contrary to the law laid down by the Supreme Court in "GKN Driveshrafts (India) Ltd. Vs. ITO; (259 ITR 19)" which mandates the disposal of objections by a speaking order.

2. The High Court observed that the Assessing Officer's actions were in defiance of the law set by the Supreme Court. As a result, the Assessment order dated 3.3.2014 for the Assessment Year 2008-09 was set aside. The petitioner was granted the opportunity to submit consolidated objections to both notices within two weeks. The Assessing Officer was directed to address these objections in due course, ensuring compliance with the legal requirements.

3. The court further directed that the Assessing Officer refrain from commencing reassessment proceedings for four weeks from the date of communicating the order addressing the objections. Additionally, the stay granted by the Court on the notices dated 8.3.2013 and 25.3.2013 was extended for fourteen weeks from the date of the order addressing objections. The petition was disposed of with these directions, and no costs were awarded in the matter.